New guidance from HMRC on Research and Development (R&D) tax relief 'could be
clearer', according to the Institute of Chartered Accountants in
England and Wales (ICAEW).
HMRC's draft guidance covers the restriction applying for contractor payments and
payments for externally provided workers (EPWs) where the R&D activity takes
place overseas; and the new rules for contracted-out R&D.
The ICAEW's Tax Faculty believes that additional clarity would be helpful on a
few of the new points.
It also said that the guidance 'does not fully address the implications of an
arrangement between the customer and the contractor that is governed by
multiple contracts'. The Institute has called for the guidance to
explain how to determine if the contractor took R&D into consideration at the
time of the contract when multiple contract dates exist.
The ICAEW also called for clarity on the requirement that the carrying-on of R&D
needs to be the primary objective of the customer in engaging the contractor if
the customer is to claim the associated R&D tax relief.
Internet link: ICAEW website